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Change of Business Activity

A company can add to or change its business activities by altering the objects clause of its Memorandum. This needs a special resolution of the shareholders and the filing of Form MGT-14 within 30 days, after which the company can lawfully carry on the new activity. Samkhya handles your change of business objects end to end.

Change of Business Activity: A Detailed Guide

A company can do only what its objects clause permits, so to take up a new line of business it must alter that clause, the objects clause in clause III of the Memorandum, under Section 13 of the Companies Act, 2013. The board approves the change and convenes a general meeting, the members pass a special resolution, and the company files Form MGT-14 with the Registrar within 30 days, attaching the altered Memorandum. Once filed, the company may lawfully carry on the new activity. If the company has unutilised money raised from the public, additional safeguards under Section 13(8) apply. After the change, the company’s registrations and licences, such as GST, are updated to reflect the new activity.

Why Change Business Activity

Changing the objects serves several purposes:

  • New Lines: It lets the company take up new lines of business.
  • Diversification: It supports diversification into related areas.
  • Pivot: It enables a pivot to a different model.
  • Legal Cover: It keeps the new activity within the company’s objects.
  • Funding Fit: It aligns the objects with an investor’s expectations.
  • Licence Basis: It provides the basis to obtain activity-specific licences.

Key Requirements

Changing the business activity requires:

  • Objects Clause: The change is to clause III of the Memorandum.
  • Board Resolution: The board approves and calls a general meeting.
  • Special Resolution: The members pass a special resolution.
  • MGT-14 in 30 Days: The resolution is filed within 30 days.
  • Altered MOA: The objects clause is updated.
  • Public Money Rule: Extra safeguards apply if public money is unutilised.

What the Change Needs

Changing the objects involves:

  • Board Meeting: Pass a board resolution and call the EGM.
  • Special Resolution: Pass the resolution altering the objects.
  • Altered Objects: Update the objects clause of the Memorandum.
  • MGT-14: File MGT-14 within 30 days with the altered MOA.
  • Activity Alignment: Ensure the name still suits the objects.
  • Update Licences: Update GST and other registrations for the new activity.

When to Change the Objects

The objects are changed:

  • When the company starts a new line of business.
  • When it diversifies into a related field.
  • When it pivots away from its original activity.
  • When an investor requires the objects to be widened.
  • When a licence requires the activity to be in the objects.

The Process

Changing the business activity starts with the board approving the new or revised objects and convening a general meeting. The members pass a special resolution altering the objects clause, and the Memorandum is updated. The company files Form MGT-14 with the Registrar within 30 days, attaching the resolution and the altered Memorandum, on the MCA V3 portal. Once the filing is taken on record, the company may lawfully carry on the new activity. If the company had raised money from the public and any is unutilised, the additional requirements of Section 13(8), including a special resolution through postal ballot and an exit option for dissenting shareholders, must be met. The company then updates its GST and other registrations.

Documents Required

For the Change:

  • The board and special resolutions, and the notice and explanatory statement of the general meeting.
  • The altered Memorandum with the new objects.

Supporting:

  • The details of the new activity.
  • The registrations, such as GST, to be updated to reflect it.

Change of Activity Process

Changing the business activity follows a clear sequence:

  1. Frame the new or revised business objects.
  2. Pass a board resolution and call a general meeting.
  3. Pass the special resolution altering the objects.
  4. Update the objects clause of the Memorandum.
  5. File MGT-14 within 30 days with the altered MOA.
  6. Meet the public-money safeguards, where they apply.
  7. Update GST and other registrations for the new activity.

Change your Objects with Samkhya

Changing your business objects with Samkhya Corporate Services is simple. Just follow these easy steps:

  • Tell us the new activity: Share the business you wish to add.
  • We draft the objects: We prepare the revised objects and resolution.
  • Fill the form: Complete our online form and provide the documents.

From there, our team handles the resolution, altered MOA, and MGT-14 filing.

After the Change

Once the objects are changed:

  • Objects Updated: The Memorandum reflects the new objects.
  • New Activity Allowed: The company can carry on the new activity.
  • Records Aligned: The MCA records show the change.
  • Licences Updated: GST and other registrations are updated.
  • Name Check: The name is confirmed to suit the new objects.
  • Keep Records: Retain the resolution and the altered MOA.

Fees and Cautions

Changing the objects is a relatively straightforward MOA alteration: the main cost is the modest MGT-14 filing fee, with professional charges separate, and there is generally no Regional Director approval for an object change alone. The discipline is the 30-day deadline for MGT-14 from the special resolution. Two cautions matter. First, if the company has unutilised money raised from the public, the Section 13(8) safeguards, a postal-ballot resolution and an exit option for dissenting shareholders, must be followed. Second, if the existing name reflects the old activity and no longer suits the new objects, a name change may also be needed. After the change, updating GST and licences keeps the company’s registrations consistent with what it actually does.

Object Clause Change at a Glance

Feature Detail
Governing Law Section 13, Companies Act 2013.
Clause Objects clause (clause III).
Approval Special resolution of members.
Key Form MGT-14, within 30 days.
After Update GST and licences.
Portal MCA V3.

Frequently Asked Questions

How does a company change its business activity?

By altering the objects clause of its Memorandum through a special resolution and filing Form MGT-14 within 30 days, after which it can carry on the new activity.

Which clause is changed?

The objects clause, clause III of the Memorandum, which sets out what business the company can carry on.

Is Central Government approval needed?

Not generally for an object change alone; a special resolution and MGT-14 are enough, unlike a name change or inter-state office shift.

What if the company raised money from the public?

If any such money is unutilised, the Section 13(8) safeguards apply, including a postal-ballot resolution and an exit option for dissenting shareholders.

Should licences be updated?

Yes. After the objects are changed, the company’s GST and other registrations should be updated to reflect the new activity.

Might a name change also be needed?

Yes, if the existing name reflects the old activity and no longer suits the new objects, a name change may also be required.